Energy Secretary Rick Perry taps emergency oil reserve in wake of Harvey

Energy Secretary Rick Perry taps emergency oil reserve in wake of Harvey

The storm took almost 25 percent of the Gulf Coast's refining capacity offline.

Andrew Lipow, who owns a Houston-based oil industry consulting firm, said the near term is going to be painful for the driving public, not only in Texas but in the states east of the Rocky Mountains.

The storm's impact has been felt in oil and gas production as well as refining.

Much of North Dakota's oil travels to the Midwest on the pipelines, as does crude out of Colorado and Wyoming.

Numerous shipments are expected to end up in Latin America, which has become increasingly reliant on gasoline and diesel supplies from the U.S. Gulf Coast in recent years amid fast-growing demand in emerging economies such as Mexico and Brazil, traders said. Some refineries in the U.S. Gulf Coast are trying to start back up and key ports are working to reopen.

AAA, she added, "does not expect refineries to be offline for months, as early reports indicate minimal to no significant damage to (the) Corpus Christi and Houston refineries" in Texas shuttered by flooding from the storm.

The direction of prices is still uncertain, however, as long as the flood waters in the Gulf Coast area continue to recede, I have to lean to the upside.

More news: Sandra Bullock Donates $1 Million to Help Hurricane Relief Effort

There is little doubt that Harvey has complicated the efforts by OPEC and its allies to force global inventories lower, but if they respond by tactically allocating different grades of crude among customers, it could still work to their benefit.

Data next week will provide a better indication of the extent of the damage to the USA energy sector from Tropical Storm Harvey. If it drops below $40, producers may not be able to make a profit, and drilling new wells would likely taper off, she said.

Pump prices have surged.

Similarly, traders have booked tankers to deliver jet fuel, diesel and gasoline from Asia and even Australia to the West Coast of the United States and Mexico, despite the huge distance across the Pacific, according to shipping data. "It's just virtually impossible at this time to get the gasoline that's available to the markets where it's needed because of flooded roads and pipelines that are down and power outages". The Automobile Association of America reported Thursday that the national average for a gallon of regular shot up from pre-Harvey $2.35 to $2.45. On Friday, as two refineries began to restart and some ports reopened, gasoline futures fell 2 percent and the crack spread RBc1-CLc1 fell more than 5 percent.

Missouri, another state with historically cheap gas, saw prices at the pump leap 10 cents a gallon overnight.

Analysts called the status of USA refineries a key to oil prices. The shutdowns have the potential to ripple across the global supply chain and impact prices. "We're kind of anxious about the availability of diesel out here, and that, too, could have an impact". The company did not say when normal operations would resume.

"Hopes that the weekend will bring some good news on port and refinery openings is probably doing its part to reduce support" for gasoline, said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

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